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Alkermes to Quadruple Workforce in Chelsea, Mass. To Support Inhaled Insulin Product Launch

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A Cambridge, Mass., drug-development company is days away from submitting to city officials its plans to quadruple the work force of its manufacturing site in nearby Chelsea, Mass., to 200 from 50 by 2010 under a $60 million facility expansion, BioRegion News has learned.
 
The expansion, aimed at satisfying anticipated demand for a product being co-developed with Eli Lilly, will benefit from $4 million in infrastructure improvements the state will underwrite as part of a year-old economic-development program.
 
Alkermes will add a second production line to its manufacturing facility in Chelsea by filling a vacant portion of its current approximately 100,000-square-foot Brickyard Square site, a set of four century-old brick buildings at 190 Everett Ave. The company will also expand that facility by another 50,000 square feet for additional office and warehouse space, allowing it to add 150 people to its current work force of 50.
 
“We’re expecting them any day now to be filing,” Chelsea City Manager Jay Ash told BioRegion News. “They’ll be going from 50 to 200 by the time the full build-out and ramp-up is completed.
 
“They’ll be breaking ground at the end of this year,” Ash added.
 
An Alkermes spokeswoman, Rebecca Peterson, would not discuss the company’s expansion plans, saying the company would announce them some time in the future.
 
In filings with the US Securities and Exchange Commission, Alkermes has already disclosed that it is expanding its manufacturing capability at the Everett Avenue building as a result of its collaboration with Eli Lilly to develop inhaled formulations of insulin and other products for the treatment of diabetes, based on Alkermes’ AIR pulmonary technology. AIR Insulin is in phase 3 clinical studies that began in July 2005.
 
“The facility is undergoing a significant expansion to add a second manufacturing line to meet post-launch requirements for AIR Insulin production, which are expected to be substantially completed in calendar year 2010,” Alkermes stated in its annual report filed June 14 for the year ending March 31.
 
Alkermes’ 15-year lease on the building expires in 2015, and the company has an option to extend the term for up to two five-year periods, the firm said in the Form 10-K annual report.
 
The facility is now partially vacant. “They use more than half [of their existing space]. In my mind, it’s about 70 percent of the space,” Ash estimated.
 
According to Ash, who also serves as the city’s top economic-development official, once Alkermes files for approvals its plans will be reviewed under the city’s streamlined permitting process, under which decisions on projects deemed to have special economic-development significance are made within about four months.
 
The expedited process is faster than the state’s “43D” quicker-decision process, signed into law last August, that requires decisions within six months on sites designated by communities as “priority development” sites.
 
Those sites must be zoned for commercial or industrial development, and allow for development or redevelopment of a building of at least 50,000 square feet gross floor area, including existing structures and contiguous buildings.
 
But Chelsea may use 43D eventually, Ash said, to redevelop certain sites — and fulfill its longtime goal of developing its own biotech cluster. Alkermes is so far the only biotech in downtown Chelsea. The city was recently close to landing a second biotech until it opted to locate overseas.
 
Chelsea is Massachusetts’ smallest city in area with 1.8 square miles, and a population of 34,106, according to a 2003 US Census estimate — down from 35,080 recorded by the 2000 US Census. Given its location about 5 miles from Cambridge, Mass., Ash said, “It would be a natural place for the expansion of biotech in Massachusetts to occur.”
 
Alkermes selected Chelsea for the expansion project over locations within and outside the state, on the East Coast and even in Europe. In addition to drawing on years of relationships with Alkermes executives, Chelsea also offered the company a 10-year tax break that is more than 10 times what the city gave the company back in 2000.
 
The company would be exempt over 10 years from the roughly $5 million — $500,000 per year — in new state income taxes and local property taxes it would otherwise have to pay as a result of the expansion, under the state Economic Development Incentive Program. Alkermes currently receives through EDIP $400,000 over 10 years in state and local tax exemptions under an agreement reached in 2000.
 
“There is new construction involved this time around, so they capture more in tax relief,” Ash said. The original project involved the renovation by Alkermes of the largest building designated for urban renewal back in 1997.
 
Ash said Chelsea’s incentives aren’t the sole reason Alkermes will expand there: “The state was very aggressive. In fact, this project wouldn’t have happened had not the state of Massachusetts stepped in,” he said.
 
Alkermes’ expansion will benefit from a $4 million grant to the city government announced last month by the state Executive Office of Economic Development.
 
“We’re looking at public improvements to our roadways and utility lines in the general vicinity, as well as the development of a parking structure to support the expansion,” Ash said. The structure would consist of 150 parking spaces, primarily for employees.
 
On June 28, the state economic-development office announced Alkermes’ expansion as one of 21 projects for which the state was awarding a total of more than $76.2 million in grants to municipalities. The funding comes from the Massachusetts Opportunity Relocation and Expansion Jobs program, created last year as part of an economic stimulus bill passed by state lawmakers and enacted by then-Gov. Mitt Romney.
 
“The return on the state’s investment is significant because by creating the right public infrastructure to support business growth, the jobs [municipalities] create will not only provide employment here in Massachusetts, but help to increase the state’s revenue base for years to come,” Massachusetts secretary of housing and economic development Daniel O’Connell said in a press release announcing the MORE Jobs grants.
 
Alkermes’ project was the only one involving a biotech company for which any of the municipalities received grants under MORE Jobs.
 
Ash said Chelsea is applying for additional state funding for the Alkermes project: “We’re looking for a total of $6.2 million overall to support infrastructure needs.”
 
Chelsea will see the other $2.2 million, he said, from the state Public Works Economic Development program and other programs: “We are engaged in discussions with the state about such programs.”

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